Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 26% and an expected return of 15%. You are considering adding one of the two stocks

You have a portfolio with a standard deviation of 26% and an expected return of 15%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add?

Expected

Return

Standard

Deviation

Correlation with

Your Portfolio's Returns

Stock A

15%

25%

0.2

Stock B

15%

19%

0.6

Standard deviation of the portfolio with stock A is _%?

Standard deviation of the portfolio with stock B is _%?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

7th Edition

007331465X, 978-0073314655

More Books

Students also viewed these Finance questions

Question

Do you prefer to schedule your classes in the morning? Yes No

Answered: 1 week ago

Question

Why is interest in portable benefits in health care increasing?

Answered: 1 week ago